Solve Bali’s Problems By Changing A Deeply Flawed System

June 28, 2012

Bali’s popular and caring Governor, I Made Mangku Pastika, is again in the news as being concerned about the effect of tourism on the island. “Tourism has been a disaster for the poor”, he said. The number of people living in poverty in Bali has jumped by 17,000 to 183,000 over the last year alone. He blames tourism for driving up the prices of basic commodities to a point where the indigent can no longer afford them. He also points to increased transmigration by non-Balinese looking for tourism-related work as putting pressure on both prices and infrastructure.

I am sure that for diplomatic reasons, Pastika didn’t mention the opportunistic price increases here ahead of Jakarta’s recently botched ‘phasing out’ of fuel subsidies and the resulting fuel price rises. That increase didn’t eventuate of course – the Central government’s duty to responsibly manage the economy took a back seat to political popularity – but there is little doubt that that fiasco has contributed to the problem as well. Prices of just about everything went up. But when the whole rationale for these cost increases suddenly vanished, those prices … well, of course, they stayed up.

Pastika’s attempts to manage Bali’s tourism bubble without destroying the soul of the island have been laudable. His ‘moratorium’ on further development in an island already over-supplied with accommodation – and under-equipped with suitable infrastructure – was a genuine attempt to rescue Bali from its growing problems.  We can see these every day – grid-locked streets, mountains of rubbish, collapsing road surfaces, environmental degradation, insufficient water and inadequate power supply.

And yet, despite the moratorium, new hotels and condominiums keep springing up like noxious weeds, taking over residential areas, obliterating rice fields and breaching height and set-back limits with impunity. Many developers appear to commence construction without even bothering the get the required permits and don’t even attempt to comply with the 40% open space rule designed to catch rain to replenish a diminishing water table. And as far as the ‘Balinese character’ required in their architectural features – well, I guess developers think that Miami or Gold Coast designs are close enough for Bali.

How can this be? I hear people blaming Pastika – after all, he is the Governor of Bali, right? He has the power to lead the way for Bali – why isn’t he enforcing his own moratorium? Why doesn’t he do something about the infrastructure?

The simple answer is – he can’t. He might be the Governor of Bali –  one of the 33 provinces of Indonesia – but he effectively has no power.

The real power in Indonesia is vested in the districts or regencies (kabupaten), and the cities (kota). Bali has eight regencies and one city – Denpasar.

The head of each regency, via its administration, has total authority, often by-passing the role of the provincial government in making and enforcing regulations and policies. And every regency can make its own rules. So much for consistency.

In effect, the Bali Governor’s role as head of the provincial government is limited to a vaguely-defined mediating role between regencies. For those familiar with the tiers of Australian government, the situation is akin to granting local municipal councils the same rights and powers as a State government, reducing that body to a symbolic and largely ceremonial role.

In Australia, such a system would result in planning chaos, with no consistency in laws, regulations, tax charges and levies, urban construction standards, or anything else that provides the glue to hold civil society together. In Bali, this system results in planning chaos, with no consistency … well, you get the picture.

The genesis of this unbelievable situation came about 11 years ago. In an attempt to decentralise Jakarta’s absolute control and devolve power to Indonesia’s far-flung provinces, the Regional Autonomy policy of 2001 was implemented.  It might have even been workable if the sub-national units – the Provinces – were granted the power to manage their own local affairs.

But no, the post-Dili paranoia that gripped Jakarta meant that districts/regencies – not provinces – were given this power, in the fear that a genuine transfer of authority to provinces might induce them to break away from Jakarta’s grip.

Are all the eight regencies happy with this arrangement? Well, Badung is happy. A large part of Bali’s development, and hence revenue, is generated there. Gianyar too seems reasonably happy with its share of the cake, as is the municipality of Denpasar. But the other six regencies would be close to destitute if it wasn’t for a revenue-sharing arrangement that originally took 30% of Badung’s revenues (and since considerably reduced) to be redistributed to the poorer areas.

So now, we have the sad spectacle of the governor of Bali trying his best to address the problems here, but being stymied by autonomous regencies which not only compete with each other for hand-out money, but whose very survival is dependent on funds from development licences, fees and taxes – and of course, the eternal bribe windfalls from granting inappropriate development permits. “Moratorium?”, they ask – “What moratorium?” A ‘permits for sale’ mentality rules, and Bali disappears under yet more towers.

Adding to the volatile mix of greed versus sustainability is a set of central guidelines which don’t even address the role of tourism or handicrafts – two of Bali’s critical ingredients. It’s a recipe for chaos. I sympathise with the Governor, and I can understand why he over-simplifies the formula so that it reads “Tourism = A Disaster for the Poor”. That’s just politics, although it does make for a fine sound-bite.

The reality is that to improve the lot of the Balinese people requires a radical re-think of all the complex components of the situation. Bali generates more than 50% of Indonesia’s $7 billion+ tourist-related revenue. Does Bali get to keep what it generates? No. Does Bali get any of the huge Visa On Arrival windfall collected from its tourists? Not a rupiah. Retaining a fair share of this money would go a long way to implementing poverty-reduction programs in Bali – but it won’t happen as long as Jakarta keeps seeing Bali as a cash cow.

On top of the huge discrepancy between the money generated and money retained, is the ludicrous situation of having a provincial government with no real power, no clout, no mandate to plan, and basically no voice in the affairs of Bali itself. These functions are being undertaken by competing regencies to the detriment of the whole province.

While Bali may not yet be ready for Bali Merdeka – true independence (nor would Jakarta’s nationalistic power-brokers ever permit it) –  it certainly is ready to push for special autonomy status, with the provincial government assuming its rightful place as the strategic seat of planning and power. It’s time that the dog wagged the tail.

When it does, listen for the screaming of the regents, especially those who have been putting their local interests ahead of those of Bali. They will provide the soundtrack for the birth of a new, mature Bali, one with a proper, hierarchical government structure instead of a chaotic set of divided fiefdoms.

I just hope that someone of Governor Pastika’s calibre, and possessing his vision, will be at the helm when that happens.



  1. The legislation passed in 2001 was probably entitled ‘divide & rule’…and has remained most effective for certain individuals. Its sad that the locals don’t retain any of the tourist gold mined from their ‘Island of the Gods’ and are faced with growing marginalization. But on the bright side… fortunately there’s no major fossil fuel or mineral deposits on this island. With this stroke of luck – the locals only receive unsustainable development…environmental damage & poverty – as opposed to wide spread human genocide at the end of a smoking gun…

  2. Very informative, thanks! I’ve been scratching my head as to why the ‘central Bali government, ie Governer Pastika’ is allowing all of this over development and now it makes sense. Competing regencies, no clear and shared vision… Exactly what Jakarta wants from Bali!

  3. A good read Vyt.

    Frankly, I can’t understand why Mangku would blame tourism for the increase of impoverishment here on Bali as opposed to the well known and documented reasons…transmigration of poorer Indonesians from other parts of Indonesia and, as you point out, the ever increasing prices of basic staples, utilities and gas of which tourism is not responsible. On the contrary, tourism has provided many Balinese with greatly improved lives in many areas of Bali and not only in Badung Regency.

    One highly important power base and perhaps the one singular power base that most effects Balinese in their daily lives is the role of adat and the kepala desa. This is all too often both misunderstood and unappreciated by foreign expats here, and this is also a cause of many problems that expats often find themselves quagmired in when moving into a kampung and building their “dream villa.” But that’s another subject altogether.

  4. … [This comment deleted by moderator, who, while agreeing with the sentiments expressed, would prefer that they be expressed in less abusive terms 😉 ]

  5. I have been a resident of Bali since 1983. This article is perfect, and you nailed it. Way to go. Roy doesn’t get it. Tourism DOES increase prices for everybody because of the upward price pressure it puts on all prices, from commodities, to land prices. Just have a look at every single tourist area you can think of, from Phuket, to Goa, to Langkawi, to Kusadasi, to Kihei.

  6. Jack, if we apply your logic to those areas of Indonesia which are not popular tourist spots, then one should expect prices there (including land) to have remained level in those areas. That of course is not the case.

    Tourism has little to do with increasing petrol costs, increased LPG costs, the rising cost of rice, etc. The rising costs of land has less to do with tourism than it does simple supply and demand. Even the cost of land in Nusa Penida (not a popular tourist area of Bali) has increased 4 to 5X in the last 12 years.

  7. Please shoot me, I can actually see Roy’s point. Indonesia is experiencing tremendous growth, and its emerging middle class is consuming more and more and driving up prices for many things, including basic commodities as well as land (lots of folks from Jakarta are buying land in Bali and other attractive islands in the archipelago). A Balinese driver I use told me that South Bali’s increasing traffic woes are due mainly to Balinese now being able to afford (or at least finance) one or more cars, when a few years back a motorbike would have been the dream. I also agree with you Jack. Tourism does drive up prices and not only in ‘tourist centers’, as a rising tide floats all boats…

  8. On top of the huge discrepancy between the money generated and money retained, is the ludicrous situation of having a provincial government with no real power, no clout, no mandate to plan, and basically no voice in the affairs of Bali itself. These functions are being undertaken by competing regencies to the detriment of the whole province.

  9. […] Tintin, "Borborigmus" wrote an article on his blog in 2012 that explains the situation perfectly. Solve Bali?s Problems By Changing A Deeply Flawed System | Borborigmus in Bali […]

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